Ontario coffers remain exposed

By Andy Gates - Argus Observer
Sunday, July 22, 2007 12:08 AM PDT

ONTARIO - A trail of abrupt decisions, mistakes and inattention to detail has left coffers vulnerable at Ontario City Hall.

Decisions made by city elected and appointed officials during the past year and half may now mean about $567,300 of taxpayer money will need to be reimbursed to water users while more than $20,000 was doled out by Ontario in response to a troubling lawsuit filed against the city in September.

Both monetary issues involve the city’s hurried attempt to revamp System Development Charges, or SDCs. SDCs are levies designed to fund capitol improvements constructed to accommodate growth.

The city’s most recent debacle concerns a 17 percent water tax it has collected since March 20, 2006 without an ordinance.

Consequently, the city may have to reimburse rate payers because it has collected those taxes — called Utility Capitalization Fees, or UCFs — without a municipal mandate.

ADVERTISEMENT

UCFs were “inadvertently” repealed, some appointed and elected city leaders said.

The technical reason UCFs were thrown out of city code, though, was because they were included in a 1997 SDC ordinance, which the former Ontario City Council repealed March 20, 2006, when it adopted a newer SDC ordinance.

That newer SDC ordinance, No. 2579-2006, does not address UCFs.

The former Ontario City Council and some of the city’s highest ranking appointed leaders apparently made some quick, problematic decisions on and around March 20, 2006, regarding the SDC/UCF issue.

And now, the city seems to be a standstill — charging UCFs without an ordinance — while its new attorney investigates where to go from here.

UCFs, an ‘inadvertent’ mistake

City lawyers apparently did not review the March 2006 SDC ordinance that repealed UCFs.

Ontario City Manager Scott Trainor said the City Council did not direct him or Ontario Public Works Director Steve Gaschler to have the city’s attorney review the mandate in its entirety.

“The council did not direct the city to have an attorney review the entire ordinance, nor was the issue of a UCF ever brought up,” Trainor said Thursday via e-mail.

It is unclear, though, what the city’s lawyer at the time would say about that.

Lawyers from the Ontario law firm Yturri Rose LLP represented the city in March 2006, but they will not answer questions without city authorization, Yturri Rose LLP attorney Bruno Jagelski said Thursday.

For undisclosed reasons, Yturri Rose and the city broke ties in April.

Ontario Mayor Joe Dominick said information furnished by the attorney to the city is confidential — even if it was paid for by tax dollars. However, the information could be released with a majority vote from the City Council.

The former City Council directed city staff to speak with legal counsel on March 6, 2006, after Ontario City Councilman Dan Cummings expressed concern about not holding public hearings on the SDC issue.

That, however, did not happen.

Former Ontario Mayor Leroy Cammack told Trainor and Gaschler to speak with a lawyer about Cummings’ concerns.

“If you guys could take care of that ... Is that agreeable?” Cammack said during a March 6, 2006 City Council meeting.

“Absolutely,” Trainor replied.

Gaschler reported back to the City Council at its next meeting, March 20, 2006.

“An issue was brought up as far as notice requirements ... council had actually directed us to go to our legal council to look at it, but ah, we brought the ordinance up and read it completely through — myself, and I had Scott look at it, and it was very clear in there that there are no additional notice requirements in this other than what council chooses to do,” Gaschler told the elected leaders.

Trainor said Thursday the city was also advised by its SDC consultant, Don Ganer.

“We spoke with the professional consultant, Don Ganer, and our city attorney about that specific issue. Don Ganer gave us an immediate response that we did not need to have a public hearing. In addition, staff reviewed the ORS (state law) and ordinance and agreed with Mr. Ganer. This was conveyed to the council and they accepted this information,” Trainor said Thursday in an e-mail.

Ganer spoke to the City Council March 6, 2006, where he conceded he is not an attorney. He told the council he believed he provided a draft of the ordinance to the city attorney. However, Ontario City Councilman John Gaskill said this week he did not know if an attorney saw the March 2006 SDC ordinance. He also said the city did not get legal advice relative to UCFs.

The council passed the ordinance March 20, 2006, and as a result, “inadvertently” threw out UCFs.

If an attorney had reviewed the 1997 SDC ordinance that set UCFs, along with the newer SDC ordinance — would the mistake have been caught?

Gaschler and Trainor are not convinced an attorney would have caught the problem.

“It could have been a real easy thing to catch, but it also could have been a real easy thing to miss,” Gaschler said.

Trainor said attorneys would have focused on state statutes if they reviewed the ordinance, and not UCFs.

“A legal review would have focused on whether or not the new ordinance met the requirements of state statutes. It would not have addressed a UCF,” Trainor said Thursday via e-mail.

There were apparently indications of hesitation from elected leaders regarding UCFs and SDC Ordinance No. 2579-2006 in March 2006.

Gaskill showed some apparent hesitation at a March 6, 2006, City Council meeting, but was cut off by Cammack.

“But the ordinance we’re replacing —” Gaskill said.

Then, Cammack chimed in, “We do that on the second — on the second reading. Is that agreeable?”

Gaskill said it was, and did not proceed further with his question.

Former Ontario City Councilman Earl Cheatham apparently recognized at the March 6 session that UCFs would be replaced by SDCs.

“All this is ... We’re going from UCFs to SDCs,” Cheatham said during the Ontario City Council’s first reading of SDC Ordinance No. 2579-2006.

Cheatham’s comment was apparently understood by at least two other council members who responded to it.

Former Ontario City Councilwoman Audrey Jacobs said, “Right.”

Cammack said, “OK.”

By carefully comparing the 1997 SDC ordinance and SDC Ordinance No. 2579-2006 — it is apparent UCFs were dropped out by the later ordinance.

But, that was still not apparent to Gaschler in July 2006 — after Ordinance No. 2579-2006 was passed.

“(Gaschler) stated he wanted to keep the UCF at the same percentage for the next year, evaluate it and take it back to council and ask for the UCF to be lowered depending on how much SDCs bring in,” according Ontario Public Works Committee Minutes from July 5, 2006.

So, is anyone to blame?

The mayor recently came down hard on Gaschler for the city’s current UCF situation.

“Because of this issue and others ... I’ve lost all confidence in the public works director (Steve Gaschler),” Dominick said Monday during a City Council meeting.

Gaskill disagreed, and said the mistake represents a “cautionary tale,” which is not one person’s fault.

“We all missed it. To me it’s not any one person’s faux pas ... There were lots of eyes looking this thing over,” Gaskill said this week.

Gaschler seemed to agree Wednesday with Gaskill, but had no comment regarding Dominick’s finger pointing.

“It does kind of baffle me how that slipped by us ... A lot is going on down here. Occasionally stuff like that does happen,” the public works director said.

Dominick said he has been accused of micro-managing. However, he said, the issue far simpler.

“The public wants accountability for their dollars,” Dominick said.

SDCs, a costly lawsuit

The city has also spent $25,765.62 on costs associated with a recently settled lawsuit filed by area developers Jackson Fox and Larry Tuttle, Trainor confirmed Thursday.

The September lawsuit asserted the City Council did not give the public an option to comment on the SDC fee resolution and amendments. It asserted the city did not hold a public hearing at its July 17, 2006, meeting when an SDC resolution, which set fees, was adopted.

The SDC resolution was later amended Aug. 7, 2006. The lawsuit states a public hearing was not held at that meeting either, even though Tuttle, Fox and Dominick wrote letters to the city between July 5 and July 10, 2006, requesting notice from the city about modifications.

Before an SDC resolution is adopted or amended, local governments that establish or modify SDCs must maintain a list of people who have made written requests for notification of changes, according to Oregon statute.

However, “The city did not provide individual written notice to either Mr. Jackson Q. Fox, Mr. Joe Dominick, or Mr. Larry J. Tuttle, as requested and as required by (state law),” according to the lawsuit. Fox said he was deeply upset by the city’s actions.

“I personally handed my request for notification letter to (City) Council President John Gaskill, in accordance with Oregon Statute 223.304. The council chose to ignore my request, as well as Oregon statute, thus denying me due process. That is not the brand of democracy I subscribe to,” Fox said in October 2006.

Trainor would not comment about the lawsuit when it was pending — but after a settlement, Trainor talked.

“Once we received requests from Mr. Dominick, Mr. Tuttle and Mr. Fox to be notified of changes in the SDC, in July (2006), we again consulted with the consultant and attorney. Both gave their input that no public hearings were necessary for an amendment to the earlier ordinance adopted by council — this is what we were sued over,” Trainor explained in an e-mail Thursday.

In the end, the city and the developers settled the lawsuit. With that settlement, the city agreed to pay Tuttle and Fox’s lawyer fees, rescind the SDC resolution and refund any SDC fees collected under that ordinance. A well- versed SDC lawyer from Lake Oswego, Andrew Stamp, represented Tuttle and Fox.

Even though city leaders recently told the council they recognized the UCF problem about a week before a recent meeting of the council, Stamp explained a potential issue with UCFs back in February.

“The city apparently charges a utility capitalization fee for water ... There needs to be discussion as to how the SDC ordinance and (methodology report) account for these funds,” Stamp wrote in a Feb. 19 letter to the city’s attorney.

“The devil is often in the details,” Stamp wrote.